Alveolar type II epithelial cells are critical for maintaining the gas exchange units of the lung. They produce pulmonary surfactant and restore the alveolar epithelium after injury. Keratinocyte growth factor (KGF) is a known mitogen for type II cells, stimulates type II cell differentiation in vitro, and protects the lung against a variety of injuries. In this proposal, we will examine the effects of KGF and other factors on the synthesis of fatty acids and phospholipids, which comprise the lipid components of pulmonary surfactant. KGF greatly stimulates overall phospholipid synthesis in vitro and specifically increases synthesis of phosphatidylcholine, disaturated phosphatidylcholine, and phosphatidylglycerol. In the first specific aim, we will determine the mechanism by which KGF stimulates fatty acid synthesis in rat type II cells. Based on our preliminary data, we believe the KGF stimulates fatty acid synthesis by activation of a coordinated group of transcription factors that include SREBP-1c and C/EBP isoforms. In addition, we will determine if ligands for LXRs, which increase SREBP-1c, increase surfactant production and lipogenic enzymes in vivo. A final portion of this specific aim will be to define the signaling pathways that increase lipogenic enzymes in response to KGF. Our focus will be on Akt, and its ability to regulate SREBP-1c and C/EBPa. The second specific aim will be to determine the regulation of surfactant phospholipid synthesis in primary cultures of human alveolar type II cells. The focus will be on SREBP-1c regulation of fatty acid synthesis in human type II cells. In the third specific aim we will characterize a novel acyltransferase that is selectively and highly expressed in type cells and whose mRNA level is increased 8-fold by KGF. We believe that this is a new glycerophospholipid acyltransferase that prefers lysoPC as the substrate and palmitoyl-CoA as the acyl donor. Specifically, the acyltransferase is important for the synthesis of dipalmitoylphosphatidylcholine (DPPC), the critical lipid in surfactant This proposal should greatly improve our understanding of the regulation of lipid metabolism in alveolar type II cells and should define potential regulatory targets for drug development in the future. This study will use adult human type II cells to determine mechanisms of surfactant production and identify molecular targets for the development of drugs for increasing surfactant production. In the future, such drugs could be used to treat acute lung injury, acute respiratory distress syndrome, respiratory distress of the newborn, severe pneumonias and diseases of small airways such as asthma.